A Custom Technology March 2014

Adoption Profile
Commissioned By
NTT Communications

Leverage A Third-Party Data

Center To Deliver Increased
Business Value
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Introduction
Companies are under increasing pressure to meet customer
needs. The convergence of mobility, cloud, social platforms
and customer experience is forcing companies to become
more agile and responsiveness to business changes.
In February 2014, NTT Communications (NTT Com)
commissioned Forrester Consulting to survey enterprises
about their data center strategies, specifically the benefits,
opportunities and potential challenges of leveraging
colocated data center services. The study surveyed 265 IT
decision-makers from multinational corporations (MNCs)
based in the US and Europe that have a local footprint in
the Asia Pacific region.
Forrester’s study yielded four key findings:
› Retail and manufacturing sectors indicate surging
demand for colocated data center services in Asia
Pacific. Seventy-one percent of respondents confirmed
either currently leveraging colocation (using leased third-
party data centers) or planning to leverage it. Among the
three verticals—banking, financial services, and insurance
(BFSI), manufacturing, and retail — retail leads the way in
colocation adoption. 45% of respondents in retail are
already collocated, versus 41% in manufacturing and 12%
in BFSI. Further, 41% in retail and manufacturing are
planning to colocate vs 33% in BFSI sector.
› Companies are leveraging colocation to transform
their technology landscape. Companies that have
already colocated identified factors like disaster recovery
and business continuity, network environment, and ability
to innovate as key drivers. 75% cited improved
management and optimized IT resources via colocation
and 72% cited increased ability to innovate by colocating.
› China, India and Indonesia are leading colocation
adoption in Asia Pacific. Between 75% and 80% of
respondents in China, Indonesia, and India have either
already colocated or plan to. In the survey, we found that
Malaysia had the lowest adoption rate of colocated data
center. Forty-seven percent of the respondents in
Malaysia have no current plans to colocate versus the
Asia Pacific average of 29%.
› Security issues remain a high business concern:
Australia, Indonesia and Singapore are the top 3
countries having security concerns related to data center
colocation. 97% responded in Australia citied security and
privacy concerns about data center colocation versus
94% in Indonesia and 90% in Singapore. Security
concerns for data center colocation differ from sector to
sector in different countries. For Australia, China, India,
Philippines, Singapore the BFSI sector has the maximum
security concern among all the verticals. For Hong Kong
and Thailand it is the Manufacturing sector. And for
Indonesia & Malaysia respondents it is Retail sector.

FIGURE 1
Most Respondents Have Already Colocated Or Plan To Leverage A Third-Party Data Center

“Indicate which category your organization would fall into on basis of

location of your data center infrastructure.”
(% of respondents who are currently leveraging or plan to leverage a colocated data center)

80% 78% 75% 73% 71% 70% 70%

65%
53%

China Indonesia India Australia Hong Kong Thailand Philippines Singapore Malaysia

Base: 265 IT budget decision-makers from MNCs headquartered in the US or Europe with local footprint in Asia Pacific region (Australia, China, Hong Kong,
India, Indonesia, Malaysia, the Philippines, Singapore, Thailand) with revenue more than US$1billion and with more than 100 employees
Source: A commissioned study conducted by Forrester Consulting on behalf of NTT Com, March 2014
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Disaster Recovery And Business Continuity, And Improving Network

Infrastructure Are The Primary Drivers Of Colocated Data Centers
In today’s age of the customer, businesses compete 24x7
on a global stage and system availability, data sovereignty,
local regulations and application performance are more
critical than ever. Companies are embracing new ways to
engage customers, and advanced back-end system
capabilities are a key differentiator.
Global companies are taking steps to colocate their data
centers for four key reasons (see Figure 2):
1. Disaster recovery and business continuity (DR/BC)
2. Network requirements
3. Physical security and compliance
4. Optimize the cost and effort to manage technology
infrastructure
Seventy-two percent of respondents cited “improving
DR/BC” as a critical priority to colocate their data centers.
Instead of incremental changes to DR/BC, companies are
seeking to transform their approach when migrating to a
colocated data center. For example, companies are
leveraging virtualization, replication, and flash-based
storage to automate failovers to significantly improve the
recovery time objective (RTO) without making significant
investments in technology infrastructure.
Upgrading the network infrastructure in existing data centers
is extremely cumbersome, especially when you have
legacy, non-virtualized environments and where
applications need to be available 24x7. Seventy-one
percent of respondents cited “improving the network
environment” as a critical priority for colocation. Survey
results indicate that companies with revenues of more than
US$50 billion in particular are colocating to access data
centers that are interconnected through high speed and
high capacity networks, which allows them to migrate
workloads more effectively.

FIGURE 2
Improving Disaster Recovery And Business Continuity Is The Top Priority For Decision-Makers

“How strongly do you rate each of the following capabilities/

drivers of data center colocation services?”
(Chart show critical drivers % for rating of 8,9 or 10 on 10 point scale)

Improving disaster recovery and business

72%
continuity capabilities

Improving the network environment (example: have 71%

access to low-latency network, multiple network-route)

Improving the physical security and compliance by 61%

choosing vendors having global accreditations

Improving agility, service levels, reliability 59%

and performance

Increasing capacity to meet busness demands 53%

Base: 265 IT budget decision-makers from MNCs headquartered in the US or Europe with local footprint in Asia Pacific region (Australia, China, Hong Kong,
India, Indonesia, Malaysia, the Philippines, Singapore, Thailand) with revenue more than US$1 billion and with more than 100 employees
Source: A commissioned study conducted by Forrester Consulting on behalf of NTT Com, March 2014
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Perceived Barriers Versus Actual Experience With Colocated Data Centers

While data indicates a strong demand for colocated data
centers, there remain concerns and barriers to adoption.
Some concerns are legitimate; others are based on false
perceptions (see Figure 3).
Companies with annual revenues of more than US$21
billion have a higher percentage of respondents who are
currently not planning to colocate. These companies differ
from companies with revenues of less than US$21 billion,
on two evaluation criteria:
1. They want to partner with vendors that can provide
global data centers interconnected through a high
speed, high capacity network.
2. They want to partner with vendors that can help provide
a private cloud alternative to public cloud for hosting IT
infrastructure.
Companies with revenues of less than US$21 billion, on the
other hand, want to colocate to a data center that supports
high demands for power and cooling.
Concerns over a potential loss of agility in colocated data
centers, particularly for installing, moving, adding or
changing physical infrastructure, wiring and installation was
cited frequently. However, 81% of respondents leveraging
colocation believe it has actually helped them improve
agility.
Viability and stability of the colocation vendor were also
commonly cited as concerns. But Forrester believes that
vendors who have built their own data centers and have a
global customer base have essentially already addressed
potential concerns over “financial stability of the colocation
provider and the long term lease of the colocation facility”.
When evaluating colocation services, Technology
professionals should focus on the primary business pain
points and adopt a right sourcing strategy that enables
increased agility and better responsiveness to business
demands. Data centers colocation is more suitable for
applications that require consistent performance, reliability
and security. IT organizations that fail to adapt quickly to
business needs will lose relevance, forcing business units to
directly source technology to meet their needs. At the same
time vendors must continue to educate, particularly about
the benefits of improving management and optimization,
and increasing agility to innovate (see Figure 4).

FIGURE 3
Priorities Of Companies To Improve Technology Infrastructure Are Higher For Companies That Have
Colocated Versus Companies With No Plan

“How strongly do you rate each of the following capabilities/

drivers of data center colocation services?”
Improving Disaster Recovery & Business Continuity capabilities
Improving the network environment (example: have access to low-latency network, multiple network-route)
Improving the physical security & compliance by choosing vendors having global accreditations
Reducing the cost & effort to maintain and/or upgrade data center infrastructure management (such as cooling,
security, power)

Leveraging 3rd party colocated data center services 87% 78% 70% 57%

Plans to leverage to colocated data center services 66% 67% 58% 46%

We are not currently planning to leverage colocated data

center services but will evaluate various options at the time of 62% 66% 53% 39%
next data center refresh

Base: 265 IT budget decision-makers from MNCs headquartered in the US or Europe with local footprint in Asia Pacific region (Australia, China, Hong Kong,
India, Indonesia, Malaysia, the Philippines, Singapore, Thailand) with revenue more than US$1 billion and with more than 100 employees
Source: A commissioned study conducted by Forrester Consulting on behalf of NTT Com, March 2014
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FIGURE 4
Perceived Benefits Versus Actual Experience With A Colocated Data Center

“What benefits do you expect to receive (or have you already received) from
leveraging a 3rd party colocated data center?”
(Chart show colocation benefits % for critical rating i.e. 8, 9 or 10 on 10 point scale)

Already Colocated Planning No Plans

83% 81%
72%
68% 66%
62%
55% 56% 54% 54%
49%
43% 43%
38%
31%

Improve management Improve agility to Provide a private cloud Reduce costs or Enable pay-per-use
and optimization of IT innovate and stay ahead of alternative to public improve total cost of consumption model
resources competitors cloud for hosting IT ownership (TCO) for
infrastructure infrastrastructure-related
spending (over on-
premise data center)

Base: 265 IT budget decision-makers from MNCs headquartered in the US or Europe with local footprint in Asia Pacific region (Australia, China, Hong Kong,
India, Indonesia, Malaysia, the Philippines, Singapore, Thailand) with revenue more than US$1 billion and with more than 100 employees
Source: A commissioned study conducted by Forrester Consulting on behalf of NTT Com, March 2014

Conclusion
Companies are being forced to make radical changes in the
way IT infrastructure is provisioned and managed. Smaller
companies are unable to spend significant time and effort
designing and maintaining physical infrastructure for data
centers such as cooling and power; they want to leverage
vendors that can do it much more efficiently. Larger
companies want to leverage global data centers that are
interconnected using high speed, high capacity, and low
latency networks for their critical enterprise applications.
Survey results indicate that the top benefits and drivers for
organizations colocating data centers are:
1. Improving management and optimization of IT
resources. It is important that companies consolidate
and optimize their technology infrastructure at the time
of colocation. This will help drive innovation and
technology adoption to support business growth
initiatives and maintain costs.
2. Improving physical security and compliance. IT
professionals must accurately assess the current risk
exposure of existing on-premise data centers. It is likely
that current risk exposure in the legacy environment is
far greater than a colocated data center.
3. Ensuring disaster-resistant facilities with anti-
seismic structures. When evaluating colocation
vendors, ensure that the data center has a low risk of
flood, storm surges, tsunami, and is away from
hazardous facilities, as well as the vendor has got
strong financial stability and long term lease for their
data centers.
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Methodology
This Technology Adoption Profile was commissioned by NTT Communications. To create this profile, Forrester leveraged its
Forrsights Budgets And Priorities Survey, Q4 2013. Forrester Consulting supplemented this data with custom survey
questions asked of 265 MNCs headquartered in the US or Europe with local footprint in the Asia Pacific region. Survey
respondents included IT decision-makers and IT managers with insights on data centers in their organizations. The auxiliary
custom survey was conducted in March 2014. For more information on Forrester’s data panel and Tech Industry Consulting
services, visit www.forrester.com.

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